Cox Padmore Skolnik & Shakarchy LLP
866-716-3813 Blog Contact
Menu

Former Executives Settle Non-Compete Dispute for $20 Million

Two former senior executives at one of the nation's largest banks recently agreed to pay their former employer $20 million to settle the claims brought against them for allegedly violating their non-compete agreements.

The senior executives left the giant financial institution in 2007. However, both executives had signed a non-compete agreement that prohibited them from competing with their prior employer in New York, New Jersey and Connecticut until 2012.

After departing their positions, both executives began working at another bank - one as CFO and the other as Vice Chairman and Chief Lending Officer. Initially, the new employer only had branches in Florida so the non-compete agreements appeared to be sound; until, of course, the new employer agreed to purchase another bank located in New York. The acquisition of this new bank put the new employer in direct competition with their prior employer in New York - an area restricted by the non-compete agreements.

In addition to the $20 million payment, the settlement also restricts the second bank from opening any bank branches in the tri-state area until January 2013. It also requires the newly acquired bank to operate as a separate entity for 6 months. The execs are also prohibited from having any role in the New York bank until the 6 months are up.

"Non-competes" and other restrictive covenants in employment contracts have become common for executives, engineers, and sales and marketing professionals. Businesses want to protect their confidential information, including client lists and intellectual property. Non-compete agreements allow protection that is limited in time and scope. In this case, the non-compete agreements restricted competition in three states for a period of five years.

The non-compete agreements were upheld in this case. It is essential, however, that any restrictive employment agreements are drafted appropriately and all the legal requirements are met. Failing to appropriately draft these clauses can result in the agreement being legally unenforceable.

Source: The Washington Post, "BankUnited executive pay $20M to Capital One," Danielle Douglas," July 19, 2012

No Comments

Leave a comment
Comment Information

Consult Our Skilled, Pragmatic Manhattan Commercial Litigation Attorneys

Tap To Request An Exploratory Consultation ยป

Entrepreneurial, Corporate and Individual Legal Services For Domestic And International Clients

To Request A Consultation By Phone, Call: 917-512-4332 (NY/NJ) | 917-512-4332 (CO) | 866-716-3813 (Toll Free)

New York Office
630 Third Avenue 19th Floor
New York, NY 10017

Toll Free: 866-716-3813
Phone: 917-512-4332
New York Office Map

Great Neck Office
98 Cutter Mill Road, Suite 310N
Great Neck, NY 11021

Toll Free: 866-716-3813
Phone: 917-512-4332
Great Neck Office Map

Hackensack Office
27 Warren Street, Suite 304
Hackensack, NJ 07601

Toll Free: 866-716-3813
Phone: 917-512-4332
Hackensack Office Map

Denver Office
1060 Humboldt Street
Denver, CO 80218

Toll Free: 866-716-3813
Phone: 917-512-4332
Denver Office Map